July WTI crude oil (CLN25) Tuesday closed down -0.31 (-0.47%), and July RBOB gasoline (RBN25) closed down -0.0072 (-0.34%).

Crude oil and gasoline prices on Tuesday gave up an early advance and settled lower.  Dollar strength (DXY00) on Tuesday sparked long liquidation pressures in crude oil, causing prices to retreat.  

Crude oil and gasoline initially moved higher Tuesday, with crude posting a 2-1/4 month high and gasoline posting a 2-week high.  Signs of progress in US-China trade talks supported crude oil prices.  Also, Tuesday's rally in the S&P 500 to a 3-1/2 month high shows confidence in the economic outlook that is supportive of energy demand and crude prices.  

The possibility of reduced trade tensions between the US and China is positive for economic growth and energy demand.  US Commerce Secretary Lutnick said Tuesday that Monday's initial trade talks with China have been "fruitful."  The trade negotiations continued Tuesday in London.

Reduced oil production in Canada is bullish for crude prices, as wildfires in Alberta, Canada, have shut down nearly 350,000 barrels per day (bpd) of crude production, or approximately 7% of Canada's total output.  

The World Bank on Tuesday cut its 2025 global GDP forecast to +2.3% from a +2.7% estimate in January, which was negative for energy demand and crude prices.

Crude prices were undercut last Wednesday after Bloomberg reported that Saudi Arabia is open to additional crude production hikes in a bid to increase its market share.  The report stated that Saudi Arabia wants OPEC+ to increase crude output by 411,000 bpd in August and potentially in September to capitalize on peak summer demand.

Signs of a global oil supply glut are weighing on crude prices, as crude oil inventories have risen by 170 million barrels over the past 100 days, according to Kayrros, which monitors inventories.

An increase in crude oil held worldwide on tankers is bearish for oil prices.  Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least seven days rose by +9.1% w/w to 81.83 million bbl in the week ended June 6.

Concern about a global oil glut is negative for crude prices.  On May 31, OPEC+ agreed to a 411,000 bpd crude production hike for July after raising output by the same amount for June.  Saudi Arabia has signaled that additional similar-sized increases in crude output could follow, which is viewed as a strategy to reduce oil prices and punish overproducing OPEC+ members, such as Kazakhstan and Iraq.  OPEC+ is boosting output to reverse the 2-year-long production cut, gradually restoring a total of 2.2 million bpd of production.  OPEC+ had previously planned to restore production between January and late 2025, but now that production cut won't be fully restored until September 2026.  OPEC May crude production rose +200,000 bpd to 27.54 million bpd.

Doubts about a nuclear deal between Iran and the US supported crude oil prices.  Iranian Supreme Leader Ali Khamenei recently said that he doesn't think negotiations with the US will succeed, and he urged the Trump administration to stop "talking nonsense." President Trump recently said Iran will face "something bad" if it doesn't quickly accept a US proposal over its nuclear program.

The consensus is that Wednesday's weekly EIA crude inventories will fall by -2.6 million, and gasoline supplies will climb by +750,000 bbl.

Last Wednesday's EIA report showed that (1) US crude oil inventories as of May 30 were -7.0% below the seasonal 5-year average, (2) gasoline inventories were -1.6% below the seasonal 5-year average, and (3) distillate inventories were -17.2% below the 5-year seasonal average.  US crude oil production in the week ending May 30 rose +0.1% w/w at 13.408 million bpd, modestly below the record high of 13.631 million bpd from the week of December 6.

Baker Hughes reported last Friday that active US oil rigs in the week ending June 6 fell by -9 to a 3-1/2 year low of 442 rigs.  The number of US oil rigs has fallen over the past two years from the 5-year high of 627 rigs posted in December 2022.